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Presidential candidate Bernie Sanders’s plan to legalize marijuana would establish the industry as a regulated private-sector market with the goal of creating small businesses.
Bernie Sanders has unveiled a new plan to legalize marijuana. It is a reasonable plan that would even stand a decent chance of passing the Senate. But one thing it is not is socialism. It is not even democratic socialism–adjacent. It is a pro-market plan that will overwhelmingly favor a small group of business owners over consumers or the general public, in the name of equity.
Sanders’s plan would legalize marijuana through executive action, but establish the industry as a regulated private-sector market with the main goal of creating small businesses. It does not try to decommodify marijuana, as some other plans would. Sanders does not try to drive down marijuana prices to financially benefit millions of regular consumers. Nor does the plan have the government try to capture all the profits, in order to share them as broadly as possible with the public, or with victims of the drug war. His plan is to make sure that the several thousand lucky business-license holders who will profit from legalization comprise a racially and ethnically diverse group.
Effectively all of the potential federal tax revenue from the first decade of marijuana legalization will be used to create a small number of minority-owned businesses and marijuana capitalists. The plan calls for $40 billion in different grants to help create minority-owned businesses, or businesses owned by people with marijuana convictions. Just $10 billion would be allocated for general community-development funds in low-income areas. The design and size of these grants also means that much of this revenue could end up being wasted, since the Sanders campaign seems to be overly optimistic about the ease of running marijuana businesses (or any small business in general).
For example, a large chunk is earmarked for grants to promote urban marijuana farms, a business model that simply will not make economic or environmental sense after federal legalization. Because marijuana is such a cheap plant to grow, the only way to have these large grants make economic sense is if Sanders’s plan adopts regulations to artificially increase profits for owners lucky enough to get the licenses. That would significantly increase prices for consumers. This level of investment can only be justified if the plan is to turn legal marijuana into a private rent-seeking operation.
While the plan says it will “incentivize” people to start marijuana businesses run like nonprofits, Sanders very explicitly does not require it. His plan does call for some restrictions on which companies can operate in the sector, and places limits on companies’ overall market share, but his vision for marijuana legalization has at its core a robust for-profit private market. Sanders does nod to worker-owned businesses and worker centers, which are at least a little more reflective of democratic socialism. But it remains a market-based approach.
To see just how pro-market the Sanders plan is, one can look as a point of comparison at the report the RAND Corporation did for Vermont. They highlight a range of options for how to legalize marijuana, based on other countries or systems used for other substances. They include options to decommodify marijuana by allowing people to only get it via nonprofit communal farms. They also include ways to make it commercially available while stopping anyone from profiting from it. This can be done by using government-run monopolies or requiring all marijuana businesses to be for-benefit corporations. The Sanders plan falls on the far right side of the spectrum of options they documented.
Image from ‘Considering Marijuana Legalization.’ Copyright © 2015 RAND Corporation. Reprinted with permission.
Twelve policy alternatives to the prohibition of marijuana
Both in the United States and around the world, there is a long tradition of government-run monopolies for products seen as vices. Currently, 17 states still have government monopolies that control all or part of the local alcohol industry, thanks in large part to the efforts of liberal Republicans in the 1930s. A government-run monopoly ensures all the profit goes to the public, preventing anyone from getting rich and removing the incentive to target young people or those with addiction issues. This has not been terribly successful with alcohol, but mainly because those government-run monopoly laws have been weakened in the decades since Prohibition.
The strange thing is that there are few sectors where there is a stronger public-policy case for direct public ownership of a product’s means of production, distribution, and exchange than with marijuana. There is probably no other economic space where there is a stronger moral, economic, and public-health argument for full government control. Nor is there any space where it is likely to be easier to implement, given the current political dynamics and the fact that the legal marijuana industry doesn’t even exist yet in many states.
Instead of indirectly trying to get a very small percentage of individuals who have been arrested for marijuana jobs in the industry via poorly targeted grants, like Sanders is proposing, a government-run monopoly could just hire only individuals with marijuana-related arrest records. Or the government could disperse all the profits/taxes as reparation checks to every American with a past conviction. Approximately 77 million Americans have a criminal record. If you generously assume half of them were for marijuana, Sanders’s $50 billion in grants could instead send each person with a marijuana conviction a $1,300 reparation check. If the government made sure to collect most of the marijuana profits, that check could potentially be doubled.
This would be a much easier, more direct, and more equitable way to help all victims of marijuana prohibition instead of just a small percentage. Vacating and expunging criminal records for past marijuana-related convictions definitely provides tangible support for all victims, but reparations would go a step further. Relatively few people who suffered because of marijuana prohibition actually want and are able to run marijuana businesses, but basically all of them could benefit from direct compensation for the cost of past fines, lost wages, and mandated drug tests.
Instead of using franchise caps to try to prevent any one for-profit company from becoming too rich and politically powerful, as Sanders is proposing, you can just outlaw all for-profit companies in the sector. Instead of the complex set of regulations Sanders is suggesting to prevent marijuana from turning into “Big Tobacco,” you can just have a government monopoly directly act in the public interest.
Sanders is effectively presented with a blank slate of how to create and regulate a new sector of the economy, and his big bold plan is … regulated capitalism with almost all the revenue going to create a relatively small number of business entrepreneurs.
If Sanders doesn’t even want to bring public ownership to marijuana, it seems his “socialism” has been widely overstated.
